Accounting for law firms has some unique requirements, and one of those requirements is trust accounting.
Choosing software specifically designed for law firms is much more beneficial than using general accounting software that doesn’t take these special requirements into consideration.
In this guide, we’ll cover the benefits of legal accounting software, what to look for, and review some of the different options to help you narrow down your search.
What are the benefits of using legal accounting software?
There are many benefits to using legal accounting software, but the overall benefit is that it makes running and maintaining your law firm a more efficient process.
1. Streamlines business practices
When you can sync invoices, contacts, disbursements, trust transactions, and financial information in one system, it not only reduces the time spent on manual entry but also gives you all the pieces of the pie in one picture.
2. Improves cash flow
A healthy cash flow is key to any law firm’s success.
Effective legal accounting software provides a clear real-time picture of the firm’s financial performance and status.
Intuitive dashboards provide financial data such as bank balances, outstanding invoices, and budgets at a glance.
3. Enables accessibility
Cloud-based accounting software makes your law firm data accessible from anywhere at any time, and reports and other pertinent information are available with just the click of a key.
4. Helps to make strategic business decisions
The easy access to the firm’s data makes it more likely that you will make better-informed business decisions.
With law accounting software, you’ll be able to produce reports quickly to give you the insight you need to make important calls.
With these reports, you can see where you’re struggling and what parts of your firm are the most successful based on the performance reports.
This way you can address the areas that are falling behind before they snowball and get out of hand.
5. Reduces time spent on manual data entry
Manual accounting and spreadsheets are tedious and time-consuming.
Law firm accounting software reduces the need for manual data entry.
6. Decreases human error
Legal accounting software ensures that data is processed correctly.
This makes your financial records more accurate and compliant with legal regulations and ethics rules.
7. Drives law firm growth
Accurate data leads to smarter business decisions, and smarter business decisions lead to success and growth.
How we evaluated law accounting software
We examined accounting programs that were tailored to law firms based on an independent assessment methodology.
We also reviewed accounting software that was useful for lawyers based on the size of the law firm, number of users, features, scalability, and cost.
Questions to ask when choosing law accounting software
- Is the accounting software specifically designed for law firms?
- Do I need payroll included in the software?
- Is the legal accounting software solution cloud-based?
- How many users does the software support?
- What are the software’s reporting capabilities?
- Do I want CRM capabilities integrated with my legal accounting software?
- Is the legal accounting software appropriate for the size of my firm?
- Does the legal accounting software have all of the features that are a priority for my business?
- Will the software grow with my business?
- Is the software affordable, cost-efficient, and falls within my budget?
- Does the billing feature offer a flat fee, hourly, hybrid, and LEDES billing?
- Is there a mobile app?
- Does the legal accounting software accept online payments?
How to choose law accounting software
There are some key features that you should look for in law accounting software.
1. Trust accounting
One of the key features that should be incorporated into your law accounting software is trust accounting.
This feature will help you stay compliant with the legal industry’s regulations when it comes to creating operating and trust accounts, generating invoices, running reports, and reconciling accounts.
In order to make verifying financial data more efficient, you’ll also want features for reconciliation.
This will help to balance business accounts, especially those with three-way trust accounting reconciliations.
3. Client relationship management system (CRM)
Accounting software that includes a CRM system will streamline your workflow and save the firm a lot of time.
This is especially helpful with billing and invoicing.
Speaking of billing, you’ll want a legal accounting software solution that includes relevant billing features so that you can generate and track invoices to simplify your workflow.
5. Online payments
To make it more convenient for your clients, accounting software that securely accepts online payments is another great option to consider.
You’ll definitely want software that incorporates at least the core bookkeeping activities.
Software for law firms that sync financial activity, such as automatically connecting expenses with invoices, ensures more accuracy and efficiency.
7. Time tracking
Accurately tracking time is key for law firm billing and profitability.
Time tracking features, such as multiple time tracking capabilities, are especially beneficial to lawyers.
Since payroll can be such a complex financial task, features that automate payroll can be a lifesaver.
Some payroll features will even sync with time-tracking apps which simplify the process even more.
9. Financial reporting
Financial reporting capabilities will be key to your firm’s success and growth.
With these capabilities, you can quickly generate sales reports, expense reports, or reports that prioritize the most relevant information for your firm.
Being able to quickly access these reports will keep you updated on the financial health of your firm at any given time.
Legal accounting software helps generate data and reports that are essential during tax season and if the law firm were ever to be audited.
Effective tax features make the tax process much smoother.
What are the top picks for law firm accounting software in 2023?
Below is a list of the top picks of law firm accounting software in 2023.
1. CosmoLex – Best all-in-one software
CosmoLex is the best law firm accounting software that features end-to-end accounting.
Their software integrates business & trust accounting, email, document management, tasks, calendar, billing, and time tracking all in one system.
The law firm practice management software features ensure that every entry automatically files with the associated client matter such as documents, emails, transactions, and meetings.
There’s also a secure client portal and a matter dashboard with real-time profit & loss.
With the billing and payment tools, you can track time on the go, identify an item without an assigned invoice, run invoice batches, and create custom templates.
The law office accounting features pull-in data from bank statements, expense logs, and time tracking for a real-time perspective and is programmed to follow accounting regulations that are specific to the legal arena.
- $89/month per user (billed annually)
- Free trial
2. Shoeboxed – Best app for scanning and organizing receipts
Shoeboxed is a great option for scanning and organizing receipts.
This software turns receipts into data for expense reporting, tax preparation, and audits.
Shoeboxed captures receipts on the go and receipts can be imported automatically from Gmail to Shoeboxed.
With Shoeboxed, you can create expense reports and search, edit, and manage receipts to use in your expense reports.
Custom financial reports can also be made with receipts attached.
If you need a place to store your business cards, Shoeboxed can transform paper business cards into online contacts.
When you upload receipts, the data is automatically categorized into 15 different tax categories.
Shoeboxed also offers a free mileage tracker for business mileage.
Another great feature is this software’s integration with other accounting tools and programs designed for lawyers.
To get started managing your business reciepts with Shoeboxed, all you need to do is stuff your receipts into the prepaid Magic Envelope and mail it to the Shoeboxed processing center to be transformed into digital data.
- Start up: $18/month (save 20% if paid annually)
- Professional: $36/month (save 20% if paid annually)
- Business: $54/month (save 20% if paid annually)
- 30-day free trial
3. CARET Legal – Best software with CRM capabilities
CARET Legal, previously known as Zola Suite, is the best law firm accounting software with CRM capabilities.
With CARET Legal, you can manage your pipeline all in one place.
CARET Legal’s CRM automatically enters leads from your website’s contact forms, tracks the origin of the leads, and generates reports.
The CRM integrates with the firm’s retainer agreements and intake forms which simplifies the process of onboarding clients.
The built-in email management allows you to communicate with these leads and clients and get documents signed with the integrated e-signature.
Other features include the following:
- Matter management features
- A calendar
- Contact management
- Document management and automation
- Task management
- A client portal
- Time and billing, including payment processing
- Trust accounting features
- Settlement management
- Complete business accounting
CARET Legal covers everything from client leads and case management to comprehensive firm accounting software for law firms.
- Enterprise: $79 per user/month billed annually
- Enterprise Plus: $89 per user/month billed annually
- Enterprise Advance: $139 per user/month billed annually
- 10-day free trial
4. Clio – Best software for scalability
Clio is the best law firm accounting software for scalability.
Their software is designed for firms of all sizes, so it’s great accounting software for law firms as they grow.
Clio’s features include case management, document management, contact management, task management, workflow automation, and a calendar to help you stay organized.
The billing features include billing, accounting, online payments, and time and expense tracking.
For engaging clients, features include client intake, client management, document management and automation, e-signatures, appointment booking, client portal, website, and email automation.
Clio also offers integrations, a mobile app, and a law firm insight dashboard.
There are 4 pricing tiers, so you can upgrade to a higher subscription as your law firm grows.
- EasyStart: $39/month per user (billed annually)
- Essentials: $69/month per user (billed annually)
- Advanced: $99/month per user (billed annually)
- Complete: $129/month per user (billed annually)
- 7-day free trial
5. Xero – Best software for unlimited users
Xero is the best legal accounting software for large law firms.
Each plan lets you have unlimited users, which is rare with legal accounting software.
Not only does Xero allow for unlimited users, but it also has plenty of features.
Xero’s features include the following:
- Bill payment
- Bank connections
- Claiming expenses
- Accepting payments
- Tracking projects
- Payroll with Gusto
- Bank reconciliation
- Contact management
- Capturing data
- Purchase orders
- Sales tax
- An accounting dashboard
- Managing fixed assets
This accounting software also features over 1,000 integrations!
- Early: $13/month
- Growing: $37/month
- Established: $70/month
- Access to Xero features for 30-days free
6. ZipBooks – Best software for small law firms
ZipBooks is the best legal accounting software for small firms, and even though it’s designed for small operations, it packs a big punch.
ZipBooks combines accounting, billing, intelligence, and expenses and turns it into a powerful system for small firms.
Intelligence automates, predicts, and advises based on actionable insights.
ZipBooks’ software also generates estimates and invoices, automates recurring auto bills, and accepts credit card payments.
This accounting software connects your credit card and bank account and pulls the transactions and balances daily so you can stay current on your financial standing.
- Starter: Free
- Smarter: $15/month
- Sophisticated: $35/month
- Accountant: Contact vendor for custom pricing
7. LeanLaw – Best software for medium-sized firms
LeanLaw is the best legal accounting software for medium-sized firms.
Their legal practice management software enables mid-sized firms to improve efficiency and increase profitability.
Features include the following:
- Trust accounting
- Reports and compensation tracking
- Legal billing
- Matter management
- Time tracking by matter
- Expense tracking
- Bulk invoicing
- Client-lawyer communication and collaboration
- Exceptional onboarding capabilities
- Intuitive integrations
The billing features include a flat fee, hourly, hybrid, and LEDES billing.
LeanLaw also integrates with QuickBooks Online.
This accounting software’s Core plan is for 1-4 user firms and LeanLaw Pro is for firms of all sizes.
- LeanLaw Core: $40/month per user (billed annually)
- LeanLaw Pro: $55/month per user (billed annually)
- 14-day free trial
8. PCLaw – Best software for large law firms
PCLaw is the best legal accounting software for large firms that have more complex and advanced needs.
This software’s system is a combination of trust accounting, billing, and practice management.
Features include compliant trust accounting, integrated billing and accounting, comprehensive matter management, automated time entry, automated forms, and customized workflows.
PCLaw offers comprehensive accounting and practice management features, reporting capabilities, and customization options for larger-sized firms.
Due to its more complex features, PCLaw has a steeper learning curve than other accounting software.
- Get a personalized quote
9. Zoho Books – Most affordable software
Zoho Books is the most affordable law firm accounting software that offers a generous free plan for law firms with revenue less than $50,000.
The free plan is for 1 user and 1 accountant and includes features such as the following:
- Invoice management
- Multi-lingual invoicing
- Recurring invoices
- Customized invoices
- Online payments
- Payment gateways
- Automated payment reminders
Other features included in the free plan are the importation of bank and credit card statements, multiple bank and credit card accounts, bank reconciliation, chart of accounts, manual journals, and reports.
Also included are client management, a customer portal, credit notes, expense and mileage tracking, manual journals, reports, 1099 contractor management, and integrations.
There are 5 other plans that are affordably priced per organization, with each plan building on the previous plan.
- Standard: $15/month per organization (billed annually)
- Professional: $40/month per organization (billed annually)
- Premium: $60/month per organization (billed annually)
- Elite: $120/month per organization (billed annually)
- Ultimate: $240/month per organization (billed annually)
- Free demo and 14-day trial
Frequently asked questions
When choosing law firm accounting software, you should determine the specific features that you need to run your firm more efficiently.
You should also ensure that the software falls within your budget.
Legal accounting software streamlines financial activities and provides law firms with valuable insight into the financial health of the firm.
PCLaw is a strong contender for software that combines law practice management software with accounting software.
The best accounting software for law firms is the one that makes your firm run smoother and more efficiently.
The key is to look for accounting tools that are legal-specific and software that integrates or includes legal practice management for a solution that best meets the needs of your firm.
Caryl Ramsey has years of experience assisting in different aspects of bookkeeping, taxes, and customer service. She uses a variety of accounting software for setting up client information, reconciling accounts, coding expenses, running financial reports, and preparing tax returns. She is also experienced in setting up corporations with the State Corporation Commission and the IRS.
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